Asia Rebounds, EU GDP Missed Expectation, Earnings To Dominate US Session

Chinese Regulators Will Support Long-Term Investment In China

The Asian markets rebound in Tuesday’s session despite fear US President Donald Trump would increase tariffs to include 100% of Chinese goods exported to the US. The news had sent US markets down in the Monday session, but they too rebound in late day trading. The regions indices were supported by good news from the China Securities Regulatory Commission. The agency says it wants to support investment in Chinese markets and announced a slate of reforms it would implement immediately.

The goal of the reforms is to improve market liquidity guide long-term capital back to the market. The list of reforms includes increasing share buybacks, mergers, and acquisitions among China’s businesses. On the investor side of the equation, the regulator says they would limit unnecessary interference with trading and level the playing field for average investors. The Shang Hai Composite, China’s mainland large-cap index, surged more than 1.00% on the news while the Hong Kong-based Heng Seng fell -0.91%.

Other indices in the region fared much better as the initial reaction to White House tariff rhetoric wore off. The Nikkei led with a gain of 1.45% and was followed closely by Australia’s ASX.

European Markets Are Mixed On A Barrage Of News

EU markets were mixed at midday after a barrage of news washed over the market. Topping the list of market-moving news is Trumps tariff talk, but it is not limited to geopolitics. Important economic data delivered a shock that increased fears the anticipated economic slowdown is occurring sooner and faster than expected. The biggest miss was EU 3rd quarter GDP which came in well below expectations. GDP grew a mere 0.2% from the previous quarter and only half the expectation. On a year over year basis GDP slowed from an upwardly revised 2.4% to a tepid 1.7%, 0.2% below the consensus estimate.

The FTSE 100 was the only index in the green at midday although the gain was fractional at 0.10%. The DAX led decliners, pushed lower by weak unemployment figures, but losses were limited to 0.35%. The euro was also pushed lower by the day’s news, falling about 0.20% versus the greenback in the early portion of Tuesday’s session. The EUR/USD is fast approaching a key support level at 1.1300 and may fall below it if US data due out later this week is as strong as expected.

Bottom-Fishers Nibbling On Cheap Stocks

US markets were indicated to open higher in the early pre-opening session, extending the rebound that began late in Monday trading. The market as led by the broad market S&P 500 Index, up about 0.50%, and closely followed by the blue-chip Dow Jones Industrial Average and tech-heavy NASDAQ Composite. The rebound, off of the eight-month low and near the February bottom, is positive sign long-term trends remain intact but traders are still wary of geopolitical developments, economic data, and earnings.

Earnings will continue to dominate the market in Tuesday’s trading. Reports due out after the bell include Baidu.com (BIDU), eBay (EBAY), Facebook (FB), T-Mobil (TMUS), and YumChina (YUMC).